The study examined the relationship between internal control systems and financial performance of small and medium enterprises (SMEs) in Wakiso District, Uganda. A cross-sectional survey design was employed with a sample of 170 SMEs selected through stratified random sampling. Data were collected using structured questionnaires and analyzed using descriptive statistics, Pearson correlation, and regression analysis. Results revealed that internal control systems had a significant positive relationship with financial performance (r = 0.741, p < 0.01), explaining 54.9% of variance. Specifically, control environment (r = 0.692, p < 0.01), risk assessment (r = 0.658, p < 0.01), control activities (r = 0.671, p < 0.01), and monitoring (r = 0.649, p < 0.01) all demonstrated strong positive relationships with financial performance. The study concluded that effective internal control systems significantly enhanced SME profitability, operational efficiency, and asset protection. Recommendations included strengthening control environments through segregation of duties, implementing systematic risk assessment procedures, enhancing control activities documentation, and establishing continuous monitoring mechanisms to improve SME financial sustainability and competitiveness.